The “King of Late Night” isn’t Jimmy Kimmel, David Letterman, Conan O’Brien, Jimmy Fallon Seth Meyers or Arsenio Hall. It’s Jack.
Jack in the Box this month announced strong sales for its first fiscal quarter, ended Jan. 19, 2014, and credited the branding of its late-night daypart for half the 1.9% gain in same-store store sales. Breakfast contributed the other half.
Late night “has been an equity for us over a long time. What you’re seeing now is us owning it,” said Chairman-CEO Lenny Comma during today’s earnings call with analysts.
Late night (9 p.m. to 5 a.m.) accounted for 15.3% of Jack in the Box sales in fiscal 2013, but only with last September’s “Munchie Meals” rollout did it stop just being open late and begin to treat late night as something different, said Chairman-CEO Lenny Comma. “We were the first to establish equity in the late-night marketplace but we didn’t reinforce that with consumers,” he said. The new menu and marketing for the overnight hours changed that. “It was our way to say, ‘You know who we are at late-night. You’ve always known who we are at late night. We’re doubling down.’ “
The “Munchie Meal” campaign worked well because “we branded the restaurant experience.” With items such as the recently introduced Bacon Insider burger, the buzz is all product news. But the late-night effort “was about the entire experience and not just the product,” Comma said.
“We’ve got everything from new packaging and new products to lighting and music that take place during that daypart. And we really are trying to get those folks that are out and are looking for that 24-hour business that they can frequent during the times of night when they’re out having a great time.,” he said.
The late-night Munchie Meal line is available only between 9 p.m. and 5 a.m. It has its own distinctive packaging, which separates it from other dayparts and helps make it a special experience. The $US6 meals include a Stacked Grilled Cheese, Exploding Cheesy Chicken sandwich, Loaded Nuggets and Brunch Burger, each served with two tacos, a half order of curly fries and a 20-oz. fountain drink. The late-night meals are not available all day, unlike the rest of its menu.
Comma said breakfast also drove Jack in the Box’s sales during the quarter. The chain promoted several morning items including a new Turkey & Egg White Breakfast Sandwich, adoption of Southern-Style Biscuits and a “2 for $US3” deal on breakfast sandwiches. It also promoted two LTO burgers: the Jalapeňo BBQ Burger and Fajita Ranch Melt. Comma said the chain intends to continuing balancing its menu mix with lower- and higher-cost items.
Jack in the Box’s average check was $US6.75 for the quarter, compared with $US6.52 a year earlier. Menu pricing was up 2.6% vs. year-ago but much of that increase had been taken earlier in the fiscal year.
QSR magazine’s 2013 Drive-Thru Performance Study pegged the average Jack in the Box drive-thru transaction at 234 seconds, far slower than winner Wendy’s 134 seconds. Comma said new equipment and better training should be able to reduce Jack in the Box’s time by 60 seconds.
“About half of that will come by improving the outlier restaurants to be more in line with our faster-running units, and the other half minute will really come from process re-engineering, which will include some equipment that should both speed up cook times and extend hold times,” he said. “We’re actively testing new equipment and procedural changes that are yielding positive results.”
Comma made an interesting comment about its Qdoba fast-casual Mexican chain, which had a same-stores increase of 2.3% for the quarter. “We won’t be able to differentiate Qdoba on the basis of food quality” because food quality is a given among fast-casual players, he said. Instead it will need to occupy a space “based on other cue the brand gives off.” This isn’t true among QSR burgers, where food quality remains uneven and can be a selling point and a differentiator.
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